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January 27, 2012

BofA CEO Moynihan Rebuts Morgan’s Gorman Over Pay

Bank of America head says he wouldn’t tell miffed employees to leave

In a direct rebuttal to Morgan Stanley CEO James Gorman's opinion that workers upset about pay and bonuses should leave, Bank of America CEO Brian Moynihan said that talks to cut employees' pay are "honest and open" and that he doesn't share Gorman's opinion. Asked if he would tell complainers to go, Moynihan said, "I wouldn’t. Our employees know what they're contributed and how they're paid. I just stay away from that."

"The difficulty for us is we're trying to balance the interest of employees that work very hard to continue our company's progression and in the interest of shareholders who haven't had a good stock price performance,” Moynihan to Bloomberg Television's Erik Schatzker in an interview from Davos, Switzerland. We've done a good job of it."

On what would help relieve financial markets:

"Everybody is at the point, and this not unique to CEOs or to regulators or the policymakers … we've got to figure out a way to get all this regulation through. At the same time we have to balance that we're in a very low growth environment for these very large economies. And how do you keep that balance so much that we deleverage so much that we slow it down. We talk about United States and Europe–two huge economies that we have to keep moving forward. That dialogue, there's nobody has an uncommon interest, it's just a question of the details of how you get there."

On what Bank of America can do to help Europe move forward:

"We do a lot of things … basically helping people's thoughts and execution both on the financial institution side on the corporate side and ultimately on the policy side."

On expectations for a "reasonably good" year for BofA's investment bank:

"From 2010 to 2011 we were down, and the first half of 2011 was pretty good … from an investment banking standpoint, we are seeing number two in the world. We continue to progress forward. The revenues range between $1 billion, $1.1-$1.5 billion and that’s been pretty constant. And we're seeing the deal flow for a lack of a better term in the pipeline come through. From a trading side, you've had serious disruptions in the markets in the last part of the past year … it's behind us in a sense that it's a new year and the businesses rebounded and the stability and the spreads are coming in. We'll see if that holds but so far so good."

On a normalized earnings picture for BofA:

"There's two or three steps to it. We have to get the cost structure down. The interest rate environment is difficult for a big core funded retail middle market bank in terms of what we

make and you can see that. And yesterday, the Fed said that's extending. So we have to get interest rates more constructive. And then we have to get the bad mortgage stuff behind us and that's costing us a lot of money. So you add that all up, we could move forward. And the stair steps are there. 2012 is about a year of getting those stair steps climbing forward.

On whether he feels BofA needs to consolidate:

I don't think we need to buy anything. We have three groups of customers. We're number two in investment banking. We're two or three in trading. We're number one in consumer pieces. We're the top wealth management business in the in the world. We don't need anything. We need to continue to show our customers and clients what they can achieve with this powerful franchise. And secondly, we have the opportunity now after six acquisitions in six years with 200,000 people coming in to actually sit and take this opportunity and operate it well. That's what gets us the income streams that shareholders need.

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